ELLIOTT WAVE ANALYSIS - Latest Market Commentary
Stock Indices
16th March 2023 - U.S. equity funds drew inflows for a third consecutive week in the seven days to March 13 with investors increasingly optimistic about a continued stock market rally even though bond markets are pricing-out much of the 150-100bps rate cuts originally expected from central### banks earlier this year. According to data from the London Stock Exchange Group (LSEG), investors purchased $4.93 billion of U.S. equity funds, the largest net weekly purchase since Feb 14. Investors purchased U.S. large, small and multi-cap funds worth a net $2.88 billion, $1.8 billion and $771 million, respectively. However, mid-cap funds saw $584 million of net selling. Tech and financials attracted the biggest inflows at a net $554 million and $389 million, respectively. Consumer discretionary witnessed a net $889 million exit. The data fits current extreme bullish sentiment although the missing link that fits around the current Elliott Wave analysis is missing – that link is some sort of exogenous trigger that forms a peak across U.S. and European indices, perhaps several trading in EM/Asia. The benchmark S&P 500, Dow Jones and Nasdaq indices, even those of the Russell 2000 small-caps have met upside targets for the completion of trends that have been in place since October ’22. January’s 5th wave… Read full summary in our latest report!
Currencies (FX)
16th March 2023 - Thursday’s U.S. producer prices showed an uptick with February’s data rising 0.6% - wholesale gasoline prices rose 6.8% - food prices were up 1.0% - in the 12 months through February, the PPI shot up 1.6% after advancing 1.0% in January - the report followed news last Tuesday### that consumer prices increased strongly for a second consecutive month in February. That’s triggered some anxieties over the timing of Federal Reserve interest rate cuts although consensus still expects the first cut in June’s Fed meeting. Regardless, the data strengthened the US$ dollar index with an advance pushing further away from last week’s low of 102.36 which is labelled as completing February’s zig zag correction as minute wave b. With today’s gain to 103.49, there’s now advancing momentum which justifies expectations.. Read full summary in our latest report!
Bonds (Interest Rates)
16th March 2023 - Thursday’s U.S. producer prices showed an uptick with February’s data rising 0.6% - wholesale gasoline prices rose 6.8% - food prices were up 1.0% - in the 12 months through February, the PPI shot up 1.6% after advancing 1.0% in March - the report followed news last Tuesday### that consumer prices increased strongly for a second consecutive month in February. That’s triggered some anxieties over the timing of Federal Reserve interest rate cuts although consensus still expects the first cut in June’s Fed meeting. The strong data has had the effect of pushing the US10yr yield higher – today’s update examines the probability of count #2’s advance extending higher towards 4.560+/-, max. 4.689+/- before declining to 3.017+/- later this year. A corresponding count #2 for the DE10yr yield depicts cycle wave A completing into the Oct.’23 high of 3.022 and a primary degree A-B-C downward correction unfolding now as cycle wave B. That allows further upside progress as primary wave B towards max. 2.755+/- over the next several weeks. Read full summary in our latest report!
Commodities
16th March 2023 - Gold’s advance from February’s low of 1985.20 as minute wave 1 of minor wave iii. three appears as an incomplete five wave impulse pattern. This is despite silver’s corresponding five wave pattern appearing completed, as does platinum’s five wave impulse advance from the### early-March low of 870.10 which kicked-started a new bullish, multi-year uptrend. Time is running out for gold to kick higher as a 5th wave - momentum indicators are overbought and turning down which is a warning to expect the unexpected –there’s more downside risk than upside, especially since the US$ dollar is currently heading higher towards 106.47+/- which can add to short-term headwinds for gold. Silver edged slightly higher during Thursday/Friday’s session, testing upside targets of 25.40+/- into today’s high of 25.45 with an immediate price-rejection lower to 25.15. This has heightened the probability that minute wave 1’s five wave impulse advance from February’s low of 21.93 has completed. The International Energy Agency said the oil market would be in a ‘slight deficit’ this year as it reduced its forecast for global supply growth to 800,000 barrels a day from 1.7mn in its February report. The new estimate assumes that voluntary cuts made by OPEC+ members to try and support prices will remain in place throughout 2024. Hedge funds have also been steadily increasing their net bets on rising prices, giving further support to the market, according to US Commodity Futures Trading Commission data. The bullish news reflects Crude oil’s intermediate wave (4) approach to upside completion from December’s low of 67.71. Read full summary in our latest report!